Japan’s $2.4bn banking IPO signals potential consolidation
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Japanese business & financeAdd to myFTGet instant alerts for this topicManage your delivery channels hereRemove from myFTJapan’s $2.4bn banking IPO signals potential consolidationSBI Shinsei Bank could use funds to fuel purchases of smaller regional lendersSBI Shinsei Bank traces its roots to the Long-Term Credit Bank of Japan, which collapsed in the late 1990s © Kiyoshi Ota/BloombergJapan’s $2.4bn banking IPO signals potential consolidation on x (opens in a new window)Japan’s $2.4bn banking IPO signals potential consolidation on facebook (opens in a new window)Japan’s $2.4bn banking IPO signals potential consolidation on linkedin (opens in a new window)Japan’s $2.4bn banking IPO signals potential consolidation on whatsapp (opens in a new window) Save Japan’s $2.4bn banking IPO signals potential consolidation on x (opens in a new window)Japan’s $2.4bn banking IPO signals potential consolidation on facebook (opens in a new window)Japan’s $2.4bn banking IPO signals potential consolidation on linkedin (opens in a new window)Japan’s $2.4bn banking IPO signals potential consolidation on whatsapp (opens in a new window) Save David Keohane and Leo Lewis in TokyoPublishedDecember 14 2025Jump to comments sectionPrint this pageStay informed with free updatesSimply sign up to the Japanese business & finance myFT Digest -- delivered directly to your inbox.A bank that once symbolised Japan’s 1990s asset bubble is set to be one of the country’s largest initial public offerings this year and could use the funds to herald a consolidation in the sector.SBI Shinsei Bank, which begins trading on Wednesday, has raised $2.4bn, valuing the company at $8.3bn. Owner SBI Holdings plans to retain a majority stake and could use the funds to fuel mergers and acquisitions among the country’s nearly 100 regional lenders, said analysts and bankers.“Based on what clients are saying, I think that consolidation among the regional banks, led by two or perhaps three big names with ambitions of becoming megabanks, is going to be a main M&A theme for Japan this year, and SBI Shinsei will be central to that,” said a senior dealmaker in Tokyo.Shinsei traces its roots to the Long-Term Credit Bank of Japan, which collapsed in the late 1990s under the weight of bad loans and was taken over by the state. It was sold to a private equity consortium led by Ripplewood Holdings and JC Flowers in 2000.SBI Holdings fully took over the bank in 2023 and delisted it at a price of just over 0.5 times book value, said analysts, meaning the market valued it below the stated worth of its net assets.Shinsei finished repaying the last of ¥370bn ($2.4bn) in state bailout funds this year, clearing the way for a relisting at slightly above book value.Japan’s banking sector is dominated by three “megabanks” — Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group — which have market capitalisations ranging from ¥14tn to ¥29tn.SBI Holdings’ market cap is only ¥2tn, but president and chief executive Yoshitaka Kitao has long pushed the idea of creating a “fourth megabank” by collecting a “giant financial ecosystem built through collaboration with regional banks”, according to an investor presentation.Analysts said taking on the three established megabanks would be a gargantuan task, but SBI was making headway because of its focus on digital banking, including an online brokerage and investments in crypto infrastructure, and its lack of legacy assets.The holding group includes securities, asset management and insurance arms and claims a customer base of about 78mn as of the end of September, with Shinsei at its heart.“SBI has product breadth. This is one reason why SBI seems to want to collect more regional bank stakes and effectively bring them under the SBI umbrella,” said Travis Lundy, an independent analyst who publishes on Smartkarma. “If it can do so cheaply, they can roll out product synergies and roll up regionals.”Any consolidation would come at an opportune time for big lenders. Japan’s central bank is raising interest rates after decades of keeping them at or below zero, which is expected to boost profit margins.For weaker regional lenders, rising rates are expected to increase competition for deposits at a time when their customer base is ageing, putting pressure on the smaller banks’ performance.Investors backing the IPO said they believed Shinsei could play a key role in consolidating weaker lenders, which regulators have been pushing.Some investors added that they expected SBI to transfer the stakes it already owns in 10 regional banks to Shinsei, which could start buying more shares in the market.Investors sitting out the IPO have raised concerns about what they believe is a high price and governance issues around SBI retaining its majority stake in Shinsei.The IPO is also happening under the shadow of a court case brought by hedge funds who contend that the 2023 buyout of Shinsei by SBI at ¥2,800 a share was undervalued.Reuse this content (opens in new window) CommentsJump to comments sectionPromoted Content Follow the topics in this article IPOs Add to myFT Japanese business & finance Add to myFT Banks Add to myFT Asia-Pacific companies Add to myFT Shinsei Bank Ltd Add to myFT Comments